Edit ModuleShow Tags

Cure the first-quarter blues

Now that we are in March, you should have a pretty good view of how your Q1 is likely to end up. If you are a revenue-generating company, you’ve probably got a formally approved 2013 plan by now (if not, why not?) Your board is paying attention to your performance against plan, and you and your management team are executing based on the plan you had approved, which likely includes both a revenue plan and an expense plan.

If your sales and revenue are not on or ahead of plan, it’s time to take a hard look at what is going on. Q1 is the easiest quarter to make since you just created the annual plan. If you miss Q1, especially in a recurring revenue, services-oriented business or adtech business, there is almost no way you will make it up over Q2 – Q4. Sure – it’s nice to think something magic, special and happy will happen, but it almost never does.

Step 1: Put the brakes right now on discretionary spending, especially head count. You are probably spending at plan. If sales / revenue / MRR are behind plan, you are just creating a bigger problem for yourself.

Step 2: Do an aggressive root cause analysis of why you missed Q1 so far (January and February). Use the five whys approach and keep digging until you actually understand what is going on. Don’t let your sales organization wave things off. Don’t assume it’s all going to come together on March 31. Don’t assume the high-level metrics you are looking at tell the story. Go deep as a management team. Get everyone on the management team in a room for the day and figure it out. It’s important.

Step 3: Keep playing through on your plan for all of Q1 other than discretionary spending. Be surgical about what is going on. Use this as a wakeup call that you aren’t executing well yet, or at least to the plan you put out there. Do you have confidence you’ll make it up in March? If you do after you think hard about it, then you’ll know in a few weeks. But don’t wait for those weeks to pass to get your mind into the issue.

Step 4: Re-forecast Q1 and the rest of 2013 based on what you expect the actuals for Q1 to be. Again, go deep. You just created an annual plan so the process and the numbers should be fresh. Use it to re-forecast based on the new information you learned in January, February, and Step 2. Get it in shape so that after you know the score for Q1, you can quickly put it in front of the board.

Step 5: Call a board meeting for around April 15. Make this a Q1 review and Q2 – Q4 planning meeting. As part of this, get a new 2013 plan approved that takes into consideration what you learned in Q1.

Don’t panic, but don’t be caught off guard. Assume you won’t make things up and get ahead of them by figuring out what your real trajectory is.

Oh – and if you are beating your Q1 plan, then start thinking about how you can accelerate and grow even faster!

Edit Module
Brad Feld

Brad has been an early stage investor and entrepreneur for more than 20 years. Prior to co-founding the Boulder-based Foundry Group, he co-founded Mobius Venture Capital and Intensity Ventures, a company that helped launch and operate software companies. Brad is a nationally recognized speaker on the topics of venture capital investing and entrepreneurship and writes widely read and well respected blogs at www.feld.com and www.askthevc.com. He holds bachelor's and master's of science degrees from from MIT. Contact him at brad@feld.com

Get more of our current issue | Subscribe to the magazine | Get our Free e-newsletter

Edit ModuleShow Tags

Archive »Related Articles

GenXYZ Photo Booth Fun

GenXYZ party goers loved the photo booth and the chance to appear on the cover of ColoradoBiz magazine. Enjoy candid images from the evening.

Three obstacles to connecting on and off the job:

As you open yourself up to more options in life, you expand your ability to face challenges with a positive perspective, which has a direct impact on the outcomes in life, including how you see yourself and others.

It's time to rethink old-school performance reviews

Change is happening almost everywhere at a pace we’ve come to accept, but some critical areas remain stuck firmly in the past. One of those is performance reviews, which some brave companies are rethinking with great success.
Edit ModuleShow Tags

Thanks for contributing to our community-- please keep your comments in good taste and appropriate for our business professional readers.

Add your comment: